Safety more important than interest rates for older ISA savers

People aged over 45 identify safety as the most important factor when deciding which ISA provider to use - higher than getting the best price, according to new research by the Financial Services Compensation Scheme (FSCS).

They rate saving with an institution covered by an official compensation scheme as being more important than having the product with "the best possible deal" or being "offered by a well-known and reputable brand".

The FSCS is the UK's statutory compensation scheme for customers of UK authorised financial services firms. The FSCS protects insurance, investments and deposits, including cash ISAs. Since 2001 it has paid more than £24 billion when financial services firms, such as Icesave, have gone bust and left people out of pocket.

The importance of safety to ISA savers increases with age with those over 65 being mostly likely to cite this. 40% of those aged 65 and over say that the most important factor is that their money is "covered by an official compensation scheme", compared with an average across all age groups of 26%. Young people put less of a premium on the safety of their ISA savings, with only 18% of those aged 16 to 34 prioritising a compensation safety net.

There are also important differences in attitudes between the sexes, with men prioritising the best rate on the market (32% of men vs. 26% of women), while being able to get their money back in the event of an institution failing is most important to women (29% of women vs. 24% of men).

Overall, 30% say "the best price/deal" is the single most important influencer on their decision. Loyalty to existing providers only matters to a small number of people, with 8% saying this is the top priority when choosing their ISA provider.

Over half of those questioned (54%) said the fact that interest rates are at historically low levels will not affect their decision to save in a cash ISA. One in five (22%) said low rates mean they are "a bit less likely to save money in a cash ISA", while only 16% said they are now "much less" likely to do so.

Mark Neale, Chief Executive of the FSCS, said: "Given the events of the last few years, it is no surprise that being sure their money is safe is a high priority for ISA savers. The facts support the stereotypes as men are more interested in a good deal than women and older savers are more cautious than the young. But even those who are driven by rates should still check that their institution is covered by the FSCS so their money is safe up to £85,000 for cash ISAs and £50,000 for an investment ISA. The FSCS was set up by government, is independent, funded by the industry and can protect your money."